South Korea Holds Interest Rates Steady at 5%

Reuters

Wednesday, 9 Jan 2008 | 9:14 PM ETReuters

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South Korea's central bank held its main interest rate steady at 5.00 percent on Thursday, as widely expected, deciding not to tighten to tackle rising inflation as it remains cautious over the risk of a global economic slowdown.

The central bank kept its benchmark overnight call rate target unchanged for the fifth consecutive month after quarter-percentage point increases in both July and August last year.

A press official at the Bank of Korea's media department informed reporters of the decision by its monetary policy committee, without elaborating. Governor Lee Seong-tae is expected to hold a news conference shortly.

All 12 economists in a Reuters poll had expected the central bank to hold interest rates steady this week. Two of those surveyed said rates could rise in the first quarter of this year.

The central bank lifted its benchmark overnight call rate target by a total of 1.75 percentage points between October 2005 and August last year to tackle inflation and help cool the real estate market.